6 - Vicat

Financial information concerning the asset base,20the financial condition and the results of the issuer20.2. HISTORICAL FINANCIAL INFORMATIONThe gross value of merchandise acquired for resaleand of supplies includes both the purchase priceand all related costs.Manufactured goods are valued at production cost,including the cost of goods sold, direct and indirectproduction costs and the depreciation on all consolidatedfixed assets used in the production process.In the case of inventories of manufactured productsand work in progress, the cost includes an appropriateshare of fixed costs based on the standardconditions of use of the production tools.Inventory depreciations are recorded when necessaryto take into account any probable losses thatcould arise at year-end.1.13. Cash and cash equivalentsCash and cash equivalents include both cash andshort-term investments of less than 3 months thatdo not present any risk of loss of value. The latter aremarked to market at the end of the period. Net cash,the change in which is presented in the statement ofcash flows, consists of cash and cash equivalents lessany bank overdrafts.1.14. Financial instrumentsFinancial assets :The Group classifies its non-derivative financial assets,when they are first entered in the financialstatements, in one of the following four categoriesof financial instruments in accordance with IAS 39,depending on the reasons for which they were originallyacquired :• long-term loans and receivables, financial assets notquoted on an active market, the payment of whichis determined or can be determined ; these are evaluatedat their net book value and can be subject toa write-down if a loss in value is identified ;• investments in non consolidated affiliates are analyzedas assets available for sale and are consequentlymeasured at the lowest of their carryingvalue and their fair value less cost of sale at the endof the period ;• financial assets valued at their fair value by theprofit and loss, since they are held for transactionpurposes (acquired and held with a view to beingresold in the short term) ;• investments held to term, including securities quotedon an active market associated with definedpayments at fixed dates ; the Group does not ownsuch assets on year-end of the presented financialaccounts.All acquisitions and disposals of financial assets arebooked at the transaction date. Financial assets arereviewed at the end of each year in order to identifyany evidence of impairment.Financial liabilities :Non-derivative financial liabilities mainly comprise borrowingsand other financial liabilities (other financings,bank overdrafts, etc.) ; they are entered at historicalcost.Treasury shares :In compliance with IAS 32, Vicat’s treasury shares arerecognized net of shareholders’ equity.Derivatives and hedging :The Group uses hedging instruments to reduce itsexposure to changes in interest and foreign currencyexchange rates resulting from its business, financingand investment operations. These hedging operationsuse financial derivatives. The Group uses interestrate swaps and caps to manage its exposureto interest rate risks. Forward FX contracts and currencyswaps are used to hedge exchange rate risks.The Group uses derivatives solely for financial hedgingpurposes and no instrument is held for speculativeends. Under IAS 39, however, certain derivativesused are not, not yet or no longer, eligible for hedgeaccounting at the closing date.Financial derivatives are valued at their fair valuein the balance sheet. Except for the cases detailedbelow, the change in fair value of derivatives is recordedas an offset in the income statement of thefinancial statement (“Change in fair value of financialassets and liabilities”). The fair values of derivativesare estimated by means of commonly-used valuationmodels taking into account the data produced byactive markets.Derivative instruments may be designated as hedginginstruments, depending on the type of hedgingrelationship :• Fair value hedging is hedging against exposure tochanges in the fair value of a booked asset or liability,or of an identified part of that asset or liability,attributable to a particular risk, in particular interestand exchange rate risks, which would affect the netprofit or loss presented ;2009 registration document - VICAT 139